Global trade recovers to pre-pandemic level


Global trade in goods and industrial production both returned to pre-pandemic levels for the first time late last year, after suffering a historic dip due to lockdowns and restrictions to control the spread of coronavirus.

The volume of goods traded rose by 2.1 per cent month-on-month in November according to data from the Netherlands Bureau for Economic Policy Analysis, taking it above its December 2019 level.

That was up 1.5 per cent from its level the year before, and the first increase on an annual basis since the pandemic hit.

Industrial production grew by 1.1 per cent on a monthly basis, topping its November 2019 level by 0.1 per cent, the bureau’s data showed. The increase was largely concentrated in China, where factory output rose nearly 7 per cent year on year.

US industrial production remains depressed at 5.4 per cent below its November 2019 level, while in the eurozone it was 1.6 per cent lower.

Line chart of Index (2010 = 100) showing Global trade recovers to pre-pandemic levels

The expansion in trade was fuelled by rising demand for imports in advanced economies. China was the main beneficiary, registering a 5.6 per cent month-on-month growth in exports, but its import volumes fell.

Goods imports rose 3 per cent month on month in the US and 1.9 per cent in the eurozone. China became the EU’s biggest trading partner in the first 11 months of 2020, overtaking the US, separate official data showed.

The improvement in both trade and industrial output came before the fresh upsurge in cases of the virus in several major economies, which has prompted new lockdowns and restrictions on activity and could pose a headwind to the economic recovery.

But global trade is expected to continue to expand in December, according to a survey of manufacturers by IHS Markit which showed an increase in the proportion of global factories which reported improving foreign orders.

Adam Slater, lead economist at Oxford Economics, said that “despite renewed restrictions in a number of economies in recent months, the growth rate of trade in 2021 will be strong”. He expects world trade volumes to expand by around 9 per cent in 2021, after slumping by 7 per cent last year.

But Joanna Konings, senior economist at ING, warned that a shortage of shipping containers and the rising cost of seaborne trade could limit volumes.

The trade data are adjusted for both inflation and seasonality.


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